ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

The following discussion should be read in conjunction with the Consolidated
Financial Statements included elsewhere in this document. See also
"Forward-Looking Statements" on page 23.

RPC, Inc. ("RPC") provides a broad range of specialized oilfield services
primarily to independent and major oilfield companies engaged in exploration,
production and development of oil and gas properties throughout the United
States, including the Gulf of Mexico, mid-continent, southwest, Rocky Mountain
and Appalachian regions, and in selected international locations. The Company's
revenues and profits are generated by providing equipment and services to
customers who operate oil and gas properties and invest capital to drill new
wells and enhance production or perform maintenance on existing wells. We
continuously monitor factors that impact current and expected customer activity
levels, such as the price of oil and natural gas, changes in pricing for our
services and equipment, and utilization of our equipment and personnel. Our
financial results are affected by geopolitical factors such as political
instability in the petroleum-producing regions of the world, overall economic
conditions and weather in the United States, the prices of oil and natural gas,
and our customers' drilling and production activities.

The discussion of our key business and financial strategies set forth under the
Overview section in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 2013 is incorporated herein by reference. In 2014, the
Company's strategy of utilizing equipment in unconventional basins has
continued. During the three months ended March 31, 2014, we made approximately
$40.3 million in capital expenditures primarily for the maintenance of our
existing revenue-producing equipment as well as purchases of new equipment,
which were lower than our capital expenditures during the first three months of
2013. However, capital expenditures during the remainder of 2014 will increase
due to a new pressure pumping expansion plan. We are now focusing on oil and
natural gas liquids directed basins where customer activity levels are
higher. In addition, the price of natural gas has increased during the first
quarter of 2014, and RPC expects to benefit in the future through modest
increases in customer activity levels in selected markets.

During the first quarter of 2014, revenues increased 17.8 percent to $501.7
million compared to the same period in the prior year. The increase in revenues
resulted primarily from higher activity levels in several of our service lines,
greater service intensity, and a larger fleet of revenue-producing equipment,
partially offset by lower pricing. International revenues for the first quarter
of 2014 increased 32.7 percent to $21.4 million compared to the same period in
the prior year. International revenues reflect increases in customer activity
levels primarily in Australia, Argentina and Gabon partially offset by decreases
in Canada and Mexico. We continue to focus on developing international growth
opportunities; however, it is difficult to predict when contracts and projects
will be initiated and their ultimate duration.

Cost of revenues as a percentage of revenues increased during the first quarter
of 2014 in comparison to the same period of the prior year due primarily to
competitive pricing for our services and job mix.

Selling, general and administrative expenses as a percentage of revenues
decreased to 9.7 percent in the first quarter of 2014 compared to 10.5 percent
in the same period in the prior year. This percentage decrease was primarily due
to the leverage of fixed costs over higher revenues.

Income before income taxes was $65.0 million for the three months ended March
31, 2014 compared to $57.4 million in the same period of 2013. The effective tax
rate for the three months ended March 31, 2014 was 39.4 percent compared to 38.9
percent in the same period of the prior year. Diluted earnings per share were
$0.18 for the three months ended March 31, 2014 compared to $0.16 in the same
period of 2013. Cash flows from operating activities were $77.9 million for the
three months ended March 31, 2014 compared to $89.3 million in the same period
of 2013 due primarily to the impact of deferred taxes and working capital
changes partially offset by an increase in net income. The notes payable to
banks increased to $80.8 million as of March 31, 2014 compared to $53.3 million
as of December 31, 2013.

We expect capital expenditures during full year 2014 will be approximately $375
million, and to be directed towards the purchases of new revenue-producing
equipment as well as the capitalized maintenance of our existing fleet of
revenue-producing equipment.

RPC, INC. AND SUBSIDIARIES

Outlook

Drilling activity in the U.S. domestic oilfields, as measured by the rotary
drilling rig count, reached a cyclical peak of 2,031 during the third quarter of
2008. The global recession that began during the fourth quarter of 2007
precipitated the steepest annualized rig count decline in U.S. domestic oilfield
history. From the third quarter of 2008 to the third quarter of 2009, the U.S.
domestic rig count dropped almost 57 percent, reaching a trough of 876 in June
2009. Between its cyclical trough in the third quarter of 2009 and its most
recent peak of 2,026 during the fourth quarter of 2011, U.S. domestic drilling
activity increased by approximately 131 percent. Beginning late in the fourth
quarter of 2011, the domestic drilling rig count began to decline and continued
to steadily decline throughout 2013. During 2013 and the first quarter of 2014,
the rotary drilling rig count has varied on a sequential basis by less than one
percent. Horizontal and directional wells drilled as a percentage of total
oilfield wells drilled have grown steadily over the past several years and
represented approximately 78 percent of total wells drilled during the first
quarter of 2014. Natural gas-directed drilling activity remains at very low
levels, and early in the second quarter of 2014 had fallen to a level not
recorded since the second quarter of 1993.

The current and projected prices of oil, natural gas and natural gas liquids are
important catalysts for U.S. domestic drilling activity. The average price of
oil has been high during 2013 and early 2014, and at the beginning of the second
quarter of 2014 was approximately 18.5 percent higher than at the same time in
2013. The sustained high price of oil is reflected in the current composition of
the U.S. domestic rig count, approximately 78 percent of which is directed
towards oil early in the second quarter of 2014. The price of oil should
continue to have a positive impact on our customers' activity levels and our
financial results, since RPC has a significant operational presence in the
domestic U.S. basins which produce oil. The price of natural gas rose during
2013 and early 2014, recovering from declines in several previous years, and
early in the second quarter of 2014 had reached its highest level since the
second quarter of 2011. During the first quarter of 2014 our activity levels
improved in selected markets due to the increase in the price of natural gas;
however, we remain cautious about continued activity increases because of
continued high U.S. natural gas production. As noted above, natural gas-directed
drilling activity has fallen to its lowest level in almost 21 years. The price
of natural gas liquids has become an increasingly important determinant of our
customers' activities, since its sales comprise a large part of our customers'
revenues, and it is produced in many of the shale resource plays that also
produce oil. During the first quarter of 2014, the average price of benchmark
natural gas liquids was 30.6 percent higher than during the 12 months ended
December 31, 2013. As with natural gas, we believe that the increase in the
price of natural gas liquids during 2014 has led to slightly improved activity
levels in selected markets.

The trend in domestic drilling activity indicates very little near-term
fluctuation in our customer's overall activity levels or in our revenues,
although as noted above, the recent increases in the prices of natural gas and
natural gas liquids has had a favorable impact on our customers'
activities. Also, the increasing service intensity of customer completion
activities has had a favorable impact on our revenues. We believe that the
prolonged winter weather in the fourth quarters of 2013 and first quarter of
2014 is partially responsible for the increase in the price of natural gas. For
this reason, as well as the fact that U.S. natural gas production continues at
record high levels, we do not believe that the recent increase in the price of
natural gas will lead to significant increases in customer activity levels over
the near term. We do not believe that the overall rig count will increase during
the remainder of 2014 unless the price of natural gas continues to rise.

We continue to monitor the market for our services and the competitive
environment. We remain cautious about the continued high production of natural
gas, and the fact that the price of natural gas is still not sufficiently high
to encourage our customers to conduct increased drilling and completion
activities in unconventional gas basins. In addition, we continue to monitor our
customers' financial condition, because the high cost and complexity of
unconventional drilling and completion may cause financial distress among our
less well-capitalized customers, thus jeopardizing timely collection of our
accounts receivable. We also monitor the competitive environment because the
high historical financial returns and favorable long-term outlook for our
industry has attracted new entrants and encouraged existing service companies to
purchase additional revenue-producing equipment. Less equipment has been added
to the overall U.S. domestic fleet in the past year than in previous years.
Also, higher activity levels and increasing completion service intensity are
causing the service capacity in the U.S. domestic market to be more highly
utilized. Furthermore, we are encouraged by the increase in the prices of
natural gas and natural gas liquids during the first and second quarters of
2014, and believe that they will encourage our customers to increase their
natural gas - directed drilling and workover activities. We believe that
utilization of our equipment and personnel will remain high if these trends
continue, and pricing for our services and equipment will improve. For these
reasons, RPC decided in the first quarter of 2014 to expand our fleet of
pressure pumping equipment. We expect to take delivery of this equipment and
place it in service during the third and fourth quarters of 2014 and the first
quarter of 2015. We will use our bank credit facility to finance this expansion,
but even with the projected additional principal drawn on this facility, we
believe that we will still maintain a conservative financial structure by our
industry's standards. The lack of availability and increased cost of qualified
labor has been a concern and has negatively impacted our revenues and
profitability. This will continue to be a concern, especially as we expand our
fleet of revenue-producing equipment in 2014 and 2015, and will therefore
require more qualified employees to operate this equipment. We are addressing
this issue through continued recruitment of new employees, training and
retention programs, and more efficient staffing models. Our consistent response
to the industry's volatility is to maintain sufficient liquidity and a
conservative capital structure and monitor our discretionary spending. We intend
to maintain a conservative capital structure during the expansion effort that we
are undertaking during 2014.

THREE MONTHS ENDED MARCH 31, 2014 COMPARED TO THREE MONTHS ENDED MARCH 31, 2013

Revenues. Revenues for the three months ended March 31, 2014 increased 17.8
percent compared to the three months ended March 31, 2013. Domestic revenues of
$480.3 million increased 17.2 percent compared to the same period in the prior
year. The increases in revenues are due primarily to higher activity levels in
several of our largest service lines, greater service intensity, and a larger
fleet of revenue-producing equipment, partially offset by lower pricing in all
of our service lines. International revenues of $21.4 million increased 32.7
percent for the three months ended March 31, 2014 compared to the same period in
the prior year. Our international revenues are impacted by the timing of project
initiation and their ultimate duration and can be difficult to predict.

The average price of natural gas was 38.9 percent higher and the average price
of oil was 4.6 percent higher during the first quarter of 2014 as compared to
the same period in the prior year. The average domestic rig count during the
current quarter was 1.2 percent higher than the same period in 2013.

The Technical Services segment revenues for the first quarter of 2014 increased
18.5 percent compared to the same period in the prior year. Revenues in this
segment increased due primarily to higher activity levels in most of the service
lines within this segment, as well as greater service intensity and raw material
usage in pressure pumping, the largest service line within this segment,
partially offset by lower pricing. The Support Services segment revenues for the
first quarter of 2014 increased by 9.2 percent compared to the same period in
the prior year. This increase was due principally to higher activity levels
within rental tools, the largest service line within this segment. Operating
profit in both the Technical and Support Services segments increased due to
higher activity levels. In Technical Services, operating profit also increased
due to greater service intensity in pressure pumping.

RPC, INC. AND SUBSIDIARIES

Cost of revenues. Cost of revenues increased 23.0 percent to $330.0 million for
the three months ended March 31, 2014 compared to $268.2 million for the three
months ended March 31, 2013. Cost of revenues increased due to higher materials
and supplies expense associated with increased activity levels and service
intensity, and higher employment costs associated with increased activity levels
during the first quarter 2014 compared to the prior year. Cost of revenues, as a
percentage of revenues, increased in the first quarter of 2014 compared to the
first quarter of 2014 due primarily to competitive pricing for our services and
job mix.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $3.8 million or 8.4 percent to $48.7 million
for the three months ended March 31, 2014 compared to the same period in the
prior year. As a percentage of revenues, these costs decreased to 9.7 percent
during the three months ended March 31, 2014 compared to 10.5 percent during the
same period in the prior year. Our selling, general and administrative expenses
increased due to higher activity levels but decreased as a percentage of
revenues compared to the prior year due to the leverage of fixed costs over
higher revenues.

Depreciation and amortization. Depreciation and amortization totaled $55.5
million for the three months ended March 31, 2014, a 5.1 percent increase,
compared to $52.8 million for the quarter ended March 31, 2013.

Loss on disposition of assets, net. Loss on disposition of assets, net was $2.2
million for the three months ended March 31, 2014 compared to $2.6 million for
the three months ended March 31, 2013. The loss on disposition of assets, net is
comprised of gains or losses related to various property and equipment
dispositions including certain equipment components experiencing increased wear
and tear which requires early dispositions, or sales to customers of lost or
damaged rental equipment.

Other income, net. Other income, net was $80 thousand for the three months ended
March 31, 2014 compared to other income, net of $0.6 million for the same period
in the prior year. Other income, net primarily includes mark to market gains and
losses of investments in the non-qualified benefit plan.

Interest expense. Interest expense was $337 thousand for the three months ended
March 31, 2014 compared to $340 thousand for the three months ended March 31,
2013.

Income tax provision. Income tax provision of $25.6 million increased during the
three months ended March 31, 2014 in comparison to $22.4 million for the same
period in 2013 primarily due to higher income before income taxes. The effective
tax rate of 39.4 percent for the three months ended March 31, 2014 was slightly
higher than the 38.9 percent for the three months ended March 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The Company's cash and cash equivalents at March 31, 2014 were $44.3 million
which is higher than normal due to the timing of receipts and the timing of
payments of principal under our revolving credit facility. The following table
sets forth the historical cash flows for the three months ended March 31, 2014
and 2013:
Three months ended March 31
(In thousands) 2014 2013
Net cash provided by operating activities $ 77,868 $ 89,309
Net cash used for investing activities (37,433 ) (50,045 )
Net cash used for financing activities (4,842 ) (43,144 )

Cash provided by operating activities for the three months ended March 31, 2014
decreased by $11.4 million compared to the same period in the prior year. This
decrease is due primarily to an unfavorable change in working capital of $13.2
million and an unfavorable change in deferred taxes of $5.2 million due to a
decrease in tax depreciation benefits resulting from lower capital expenditures,
partially offset by an increase in net income of $4.3 million.

RPC, INC. AND SUBSIDIARIES

The unfavorable change in working capital is primarily due to the following: an
unfavorable change of $43.4 million in accounts receivable due to higher
business activity levels and an unfavorable change of $17.4 million in
inventories due to higher business activity levels. These unfavorable changes
were partially offset by a favorable change in accounts payable of $14.9 million
consistent with increasing business activity levels; a favorable change of $24.9
million in net current income taxes receivable/payable; and a favorable change
of $3.8 million in accrued state, local and other taxes due to the timing of
payments.

Cash used for investing activities for the three months ended March 31, 2014
decreased by $12.6 million, compared to the three months ended March 31, 2013,
primarily as a result of lower capital expenditures in response to highly
competitive pricing.

Cash used for financing activities for the three months ended March 31, 2014
decreased by $38.3 million primarily as a result of higher net loan borrowings
partially offset by higher open market share repurchases during the three months
ended March 31, 2014 compared to the same period in the prior year.

Financial Condition and Liquidity

The Company's financial condition as of March 31, 2014 remains strong. We
believe the liquidity provided by our existing cash and cash equivalents, our
overall strong capitalization and cash expected to be generated from operations
will provide sufficient liquidity to meet our requirements for at least the next
twelve months. The Company currently has a $350 million revolving credit
facility (the "Revolving Credit Agreement") that matures in January 2019. The
Revolving Credit Agreement contains customary terms and conditions, including
certain financial covenants including covenants restricting RPC's ability to
incur liens or merge or consolidate with another entity. Our outstanding
borrowings were $80.8 million at March 31, 2014 and approximately $24.1 million
of the credit facility supports outstanding letters of credit relating to
self-insurance programs or contract bids. Accordingly, a total of $245.1 million
was available under our facility as of March 31, 2014. Additional information
regarding our Revolving Credit Agreement is included in Note 9 to our
Consolidated Financial Statements included in this report.

The Company's decisions about the amount of cash to be used for investing and
financing purposes are influenced by its capital position, including access to
borrowings under our credit facility, and the expected amount of cash to be
provided by operations. We believe our liquidity will continue to provide the
opportunity to grow our asset base and revenues during periods with positive
business conditions and strong customer activity levels. In addition, the
Company's decisions about the amount of cash to be used for investing and
financing activities may also be influenced by the financial covenants in our
credit facility.

Cash Requirements

The Company currently expects that capital expenditures will be approximately
$375 million during 2014, of which $40.3 million has been spent as of March 31,
2014. We expect capital expenditures for the remainder of 2014 to be primarily
directed towards expansion of our pressure pumping fleet and capitalized
equipment maintenance. The actual amount of 2014 capital expenditures will
depend upon equipment maintenance requirements, expansion opportunities, and
equipment delivery schedules and can be modified based on market conditions and
other factors.

The Company has ongoing sales and use tax audits in various jurisdictions
subject to varying interpretations of statutes. The Company has recorded the
exposure from these audits to the extent issues are resolved or are reasonably
estimable. There are issues that could result in unfavorable outcomes that
cannot be currently estimated.

The Company's Retirement Income Plan, a multiple employer trusteed defined
benefit pension plan, provides monthly benefits upon retirement at age 65 to
eligible employees. The Company contributed approximately $0.8 million to this
plan in the first quarter of 2014 and does not expect to make any additional
contributions during the remainder of 2014.

As of March 31, 2014, the Company's 1998 stock buyback program authorizes the
repurchase of up to 31,578,125 shares. There were 399,611 shares purchased on
the open market during the first quarter of 2014, and 4,312,623 shares remain
available to be repurchased under the current authorization as of March 31,
2014. The Company may repurchase outstanding common shares periodically based on
market conditions and our capital allocation strategies considering restrictions
under our credit facility. The stock buyback program does not have a
predetermined expiration date.

RPC, INC. AND SUBSIDIARIES

On April 22, 2014, the Board of Directors approved a $0.105 per share cash
dividend payable June 10, 2014 to stockholders of record at the close of
business May 9, 2014. The Company expects to continue to pay cash dividends to
common stockholders, subject to the earnings and financial condition of the
Company and other relevant factors.

INFLATION

The Company purchases its equipment and materials from suppliers who provide
competitive prices, and employs skilled workers from competitive labor
markets. If inflation in the general economy increases, the Company's costs for
equipment, materials and labor could increase as well. Also, increases in
activity in the domestic oilfield can cause upward wage pressures in the labor
markets from which it hires employees as well as increases in the costs of
certain materials and key equipment components used to provide services to the
Company's customers. During 2012 and 2013, the Company incurred higher
employment costs due to a continued shortage of skilled labor in many of its
markets. During the first quarter of 2014, we began to experience additional
cost pressures due to competition for available skilled employees, and the
Company expects that labor costs will continue to remain high during
2014. During 2012, the prices of certain raw materials used to provide the
Company's services fluctuated significantly. The Company mitigated some of the
cost increases for raw materials by securing materials through additional
sources, and the Company continued to source raw materials from these additional
sources in 2013 and the first quarter of 2014. Increased availability of many of
these raw materials in response to high market prices has caused prices of some
of these raw materials to decline, although we are beginning to experience
upward price pressures on the prices of certain raw materials due to high
activity levels and service intensity. Finally, the price of equipment used to
provide services to the Company's customers has remained relatively constant in
spite of declining demand.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have any material off balance sheet arrangements.

RELATED PARTY TRANSACTIONS

Marine Products Corporation

Effective February 28, 2001, the Company spun-off the business conducted through
Chaparral Boats, Inc, RPC's former powerboat manufacturing segment. In
conjunction with the spin-off, RPC and Marine Products Corporation entered into
various agreements that define the companies' relationship. During the three
months ended March 31, 2014, RPC charged Marine Products Corporation for its
allocable share of administrative costs incurred for services rendered on behalf
of Marine Products Corporation totaling $175,000 for the three months ended
March 31, 2014 compared to $112,000 for the comparable period in 2013.

Other

The Company periodically purchases in the ordinary course of business products
or services from suppliers who are owned by officers or significant stockholders
of, or affiliated with the directors of RPC. The total amounts paid to these
affiliated parties were $367,000 for the three months ended March 31, 2014 and
$405,000 for the three months ended March 31, 2013.

RPC receives certain administrative services and rents office space from
Rollins, Inc. (a company of which Mr. R. Randall Rollins is also Chairman, and
which is controlled by Mr. Rollins and his affiliates). The service agreements
between Rollins, Inc. and the Company provide for the provision of services on a
cost reimbursement basis and are terminable on three months' notice. The
services covered by these agreements include office space, selected
administration services for certain employee benefit programs, and other
administrative services. Charges to the Company (or to corporations which are
subsidiaries of the Company) for such services and rent aggregated $21,000 for
the three months ended March 31, 2014 and 2013.

RPC, INC. AND SUBSIDIARIES

CRITICAL ACCOUNTING POLICIES

The discussion of Critical Accounting Policies is incorporated herein by
. . .